Pakistan speeds pursuit of Iranian pipeline, defying U.S.

ISLAMABAD — With a decision to fast-track the construction of a natural gas pipeline from Iran, Pakistan is underscoring not only the energy needs of its flailing economy but also its growing estrangement from Washington.

The move came despite the objections of the United States and could put Pakistan at risk of violating U.S. sanctions on Tehran aimed at denying Iran hard currency that it needs for its nuclear and ballistic missile programs. But as President Asif Ali Zardari said in a rare television interview last week, Pakistan has no choice but to seek greater ties with its neighbors — Iran, China, India and Afghanistan — "because the economies of the West are in trouble and not in a position to help us."

Zardari's comments were the clearest enunciation yet of a change in Pakistan's foreign policy away from the United States as Islamabad plans for 2014, when U.S.-led NATO combat forces are expected to stand down in Afghanistan.

Zardari said Pakistan would not be drawn into new American "theaters of war" in the region — a clear reference to fresh U.S. sanctions against Iran and tensions stemming from Tehran's threat to close the Strait of Hormuz, a vital waterway for oil traffic. Pakistan, he said, would accelerate the construction of a natural gas pipeline from Iran to plug a supply shortfall that in December brought the economy here to a near standstill.

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"We will not limit our commercial relations with any country because of the political whims of any outside power," Zardari told the Geo cable news channel in an interview aired Friday. "Our priority is the needs of our population of nearly 200 million people."

The U.S. has repeatedly urged Pakistan to reconsider its plans to import up to 1 billion cubic meters of natural gas a year beginning in 2017 from Iran's South Pars field — part of a geological structure under the Persian Gulf that forms the world's largest deposit of natural gas. Last week, State Department spokeswoman Victoria Nuland said, "We've made absolutely clear over many months now our concern about this deal and we will continue to talk to Pakistan about it."

Iran has completed construction of the $7.5 billion pipeline up to the border with Pakistan, which has begun preparing to assemble its section. The countries are targeting mid-2014 for gas supplies to begin flowing.

Foreign policy analysts linked Pakistan's growing ties with Iran to the deterioration of its relationship with Washington since May, when U.S. officials decided not to inform their Pakistani counterparts of the covert U.S. raid that killed Osama bin Laden 60 miles north of Islamabad.

The relationship plunged to its lowest point after NATO forces inadvertently killed about two dozen Pakistani soldiers in a friendly-fire incident on the Afghanistan border in November. Pakistan has since barred the passage of NATO military supplies through its border crossings into Afghanistan, while a parliamentary committee weighs possible foreign policy changes that could include attempting to renegotiate U.S.-Pakistani defense agreements. A special session of parliament is expected to vote on the committee's recommendations later this month.

"Since 9/11, Pakistan has been obliged to cede a lot of regional strategic decision-making to the U.S, and its relations with Iran suffered badly," said Ghani Jafar, an expert and commentator on Pakistan-Iran relations.

"Now it has chosen to exercise its strategic prerogative of building good relations with Iran. India to the east has been hostile, and Afghanistan to the northwest has hardly been a friend. Come what may, we have got to have Iran as a friend," Jafar said.

China, Pakistan's closest ally, is on course to surpass the U.S. as Pakistan's biggest trading partner by 2015 and is gradually taking on the role of its major infrastructure investment partner.

Last week, China also agreed to help shore up Pakistan's devaluing rupee and extended a line of credit to allow Islamabad to make payments on an International Monetary Fund loan.

Pakistan's moves come as new U.S. sanctions target Iran's oil exports and European Union nations have agreed in principle to ban imports of Iranian oil in response to Tehran's nuclear program, which is widely believed to be secretly developing a nuclear weapon, an allegation denied by Iran.

U.S.-Iranian tensions rose sharply this week when Tehran claimed that it had begun to enrich uranium at a second nuclear facility, and Iran's judiciary sentenced an imprisoned 28-year-old American to death for espionage, a charge his family has denied.

Pakistan could face U.S. sanctions under this deal with Iran, but the Obama administration has waived the sanctions for nations such as China in order not to upset world oil markets or jeopardize important relationships. Michael Singh, the senior director for Middle Eastern affairs on President George W. Bush's National Security Council, said that Obama faces a quandary in deciding whether to sanction Pakistan.

"They've avoided sanctioning Chinese entities. Would they do the same with Pakistan? It certainly is possible, given the deteriorating state of relations," said Singh, now managing director of the Washington Institute for Near East Policy. "They may not want to be forced into a confrontation with the Pakistanis right now with things being so delicate."

With Iran under increasing pressure, Pakistan in December turned to China to underwrite the pipeline project. At Pakistan's suggestion, China is considering whether to import Iranian gas via an extension of the Pakistan pipeline — a move that would make it the third prospective partner in the project. China would replace India, which backed out in 2008 after signing a deal with the United States for the transfer of nuclear power generation technology.

Pakistan demanded a similar deal from the United States but was rebuffed because its former top nuclear scientist, Abdul Qadeer Khan, was caught red-handed in 2003 selling uranium enrichment technology to Libya. Khan's illicit network also supplied nuclear weapons-related technology to Iran.

Washington is backing an alternative pipeline project that would supply a similar amount of natural gas from the central Asian republic of Turkmenistan, via Afghanistan, to Pakistan and onward to India. But the project is lagging about four years behind the Iranian pipeline.

While Pakistani officials have been involved in negotiations over the Turkmenistan project, they privately express doubts that Turkmenistan has sufficient gas — and note that the pipeline could only be constructed once violence ebbs in Afghanistan.

"The Iranian pipeline is the only feasible, practicable solution to Pakistan's energy crisis," Jafar said.

Demand for natural gas in Pakistan is outpacing supply by 25 percent, forcing the country to institute rationing for homes, motorists and factories and phase out subsidies, which has sparked nationwide protests. Currently, gas stations are open just three days a week in a nation that reportedly has 2.5 million compressed natural gas-powered road vehicles.

Gas-powered fertilizer plants haven't been able to produce at full capacity, creating nationwide agricultural shortages and doubling prices during the crucial wheat-planting season. The shortages also have harmed Pakistan's textile industry, the biggest private sector employer and producer of $22 billion in export earnings, easily Pakistan's biggest source of foreign currency.

Parallel to the pipeline, Pakistan is close to finalizing an agreement to import 1,000 megawatts per day of Iranian-generated electricity.

Pakistan also is exploring the possibility of importing 500 megawatts of electricity from the Indian border state of Punjab — part of tentative negotiations between Pakistan and India toward a comprehensive settlement of longstanding disputes between the nuclear rivals.

(Hussain is a McClatchy special correspondent. Jonathan S. Landay contributed from Washington.)